U.S. Prescription Drug Denials by Private Insurers Increase 25% from 2016 to 2023
Prescription drug claim denials by private insurers in the United States have increased by 25% from 2016 to 2023, rising from 18.3% to 22.9%, as revealed by an analysis of over 4 billion claims conducted by Komodo Health. This uptick spans multiple major health plans, including UnitedHealthcare, the largest private insurer. While government-funded programs must disclose denial rates publicly, private insurers often keep this data confidential, with Komodo Health aggregating information from pharmacies, insurers, and intermediaries to provide insight into these trends.
The escalating denial rates contribute to growing scrutiny of private health insurers, with many denial decisions managed by pharmacy benefit managers (PBMs) and influenced by employer coverage choices. Industry analysts suggest that factors such as high costs of popular medications like weight-loss drugs, increased automation using artificial intelligence in claims processing, and prior authorization requirements contribute to these rising rejection rates.
Prior authorization, a process requiring insurer approval before coverage of certain treatments, accounted for about 10% of denials and has been targeted for reform by insurers pledging to expedite decisions and reduce its use. The most frequent denial reason is prescription refills being requested too early. Insurers maintain that many denied claims are followed by approved resubmissions and attribute some rejections to incomplete or inaccurate submission by providers or pharmacies.
The impact of denials on patient outcomes remains difficult to measure due to challenges linking claims data with clinical records. However, studies have documented delays in critical medication access resulting from denials, such as nearly 10-day delays in oral chemotherapy treatments for cancer patients subject to prior authorization policies. Such interruptions may have severe implications for treatment efficacy and patient health.
Recent individual cases underscore patient challenges, exemplified by a patient whose inhaler prescription was initially denied despite medical necessity, leading to significant out-of-pocket costs and health risk during wildfire events. Appeals processes can reverse such decisions, but may require extensive patient effort and expertise.
The insurance industry acknowledges escalating drug costs, claim complexity, and submission issues contribute to denials. Industry lobbying groups highlight that plans still approve the majority of claims received despite the rising denial rates. Insurers have differing trends in denial rates, with some showing recent improvements.
The growth in denials suggests a complex interplay among cost management strategies, technological adoption such as AI for claim adjudication, and regulatory and employer plan design influences. Increased denial rates reflect the layering of restrictions and administrative processes insurers use to control drug spending.
Overall, the increase in prescription drug claim denials calls for continued industry attention on balancing cost controls with patient access and the efficiency and transparency of claims management practices. Ongoing reforms and advancements in real-time claim adjudication aim to address delays and improve the patient experience within the complex U.S. private health insurance system.